All articles in the Farm in, Farm Out Section:

“If you did this much, I have enough confidence in you to give you more responsibility”

It is very unique when a single individual along with his team puts up something as edifying as this. I’ve known Austin as the Managing Director of Seplat Petroleum then I saw him with Platform Petroleum, I was a bit confused. Now he goes by the tag name Advisor, a usual synonym for disguising heavy shareholders in oil parlance. I’m glad he’s giving back in a very big way and I urge everybody who’s an alumnus in every university in the country to follow suit.

It is significant in terms of what message he’s sending which is that Nigerian graduands study with the best tools in the best environment and produce the best results. “I congratulate Platform Petroleum and if you did this much, I have enough confidence in you to give you more responsibility and I’m going to work towards that”. I’m impressed with you and what you did and I’m impressed by the fact that you were one of the first to take advantage of the Marginal Field Allocation. I’m going to do what I can to ensure there’re more marginal field allocations to people like you.

In Houston I announced the Project 100, the whole idea is to identify 100 Nigerians who have the impetus, resources and skill set to be able take oil industry forward and do the very quick things. We’re beginning to search for those Nigerians and clearly you’re one of the people we’re looking for. Nigerians have shown they can do it. I’m looking forward to be able to announce soon what terminal date we’ll have for the production of FPSOs in Nigeria, such big type projects.

This morning at the Federal Executive Council, under the guidance of the Acting President, we approved the new Gas Policy for 2017 which is now official and we’re in the thresholds of approving a new Petroleum Policy and working very hard with National Assembly to finalize the PIB. The terrain today is now different, oil is no longer the commodity that we can take for granted in terms of pricing. Pricing has tumbled down to about a quarter of what it used to be, production has pummelled and no matter how much we try to fight as OPEC, we continue to suffer the pangs of price uncertainties and continual decline. Every country worth its salt is looking inward, in terms of investors.

It’s amazing how much Nigerian investors exist when you see the amount of fields bought up from the majors by Nigerians, you’ll realize we actually neglect our capacity. One of the things I’m committed to do under the Project 100 Theory is to create the right incentives for Nigerians to invest in their own country. Different from those investments, there’re certain very bold steps we must take.

Refining for example we’ve been having all these debates, but the reality is if we can’t refine our petroleum products in this country, it’s a major shame. And whatever it takes, I seek all your support in all of these, we must achieve those 2019 goal post. In terms of financing, we have changed the dynamics of the funding mechanism that allows the majors to move forward. We need to transmit some of those advantages to domestic producers and I’m hoping that in the next one month, the process will be completed and we’ll give you some advantages that we give the majors.

There’re lots of things to be done, we’re moving from oil to gas. Gas is a new equation but more importantly, we’re moving to aphilosophical base of not just producing oil and shipping out crude rather having to process as much of that into this country. Hopefully soon, we’ll be able to provide to our Nigerian populace, our work is cut out for us, there’s a huge amount of work out there. When we see this sort of effort that Austin has done together with the state, it is time to knock doors, it is time to say you must take coverage of this and begin to move forward it encourages all of us to move forward.

Speech delivered by Mr. Kachikwu, Nigeria’s Minister of State for Petroleum Resources on the occasion of his opening of a $0.6MillionGeoscience Teaching and Research Complex at the University of Nigeria, Nsukka.

Public officers who received money from President Yoweri Museveni for ostensibly helping the state to recover tax payments from Heritage Oil and Gas Ltd were in contravention of Ugandan law, the country’s parliament has noted.

President Museveni’s payment of $1.7Million (or Six Billion Ugandan Shillings) to 42 public officers who participated in the Heritage Oil and Gas Arbitration case, had caused a storm of criticism across the country. All over the media, radio, newspapers, TV and in the social media, commentators are calling it “The Handshake Scandal”.

A report, released last week by the Parliamentary Committee on Commissions, Statutory Authority and State Enterprises (COSASE) said a team, representing those officers, met the President at his country home in Rwakitura on May 17, 2015 and “requested for a reward to which the president agreed”.

The Ugandan Parliament assigned the committee, on January 19, 2017 to, among others, investigate the claims that the public officers solicited for the handshake, the basis of determination of the beneficiaries of the bonus payment and in effect examine whether all proper and legal procedures under the laws of Uganda were followed in making the payment.

The committee evaluated letters by the Attorney General dated April 13, 2015 and that of the President dated November 16, 2015 which all confirmed that the team that had met the President had solicited for money as a reward for their efforts which led to the winning of the capital gains tax case.

Mr.Museveni had defended his payment of the money to officers involved in winning the capital tax gains case against Heritage Oil, because, in his view, their action had helped recovered, for Uganda, a lot of money.

The President was particularly excited that a Ugandan legal team had won the landmark $434MM (over Sh1.1 Trillion) tax case in London against Heritage Oil and Gas Ltd. A three-member arbitration team ruled against the three core tax claims by Heritage, which was contesting the decision by the Uganda Revenue Authority (URA) to tax their $1.45Billion transaction with Tullow Oil.

Ms Doris Akol, the Commissioner General Uganda Revenue Authority (URA), was head of URA’s legal department, in April 2013, that led the court battles against both Tullow Oil and and Heritage and won the case in London, which “conclusively affirmed that oil transactions will be taxable. It means that such deals will be subject to a 30% capital-gains tax for Uganda”, according to the Ugandan newspaper New Vision.

Wouldn’t this be enough justification for President Museveni to reward officers involved in such a landmark case?
COSASE, apparently, doesn’t think so. The report by the legislators led by the committee chairperson, Abdul Katuntusays otherwise. The report states that all the beneficiaries denied soliciting for the reward apart from Ali Ssekatawa, who incidentally was the lead lawyer for the state at the London hearing.

The beneficiaries gave basis for the reward as Article 98 and 99 of the Constitution of the Republic of Uganda, suggesting that the President being the fountain of honour exercised his executive powers and directed that the team be given the reward.

But despite the President informing the committee that it was his decision to reward the team, “members found it morally wrong and setting a bad precedent for other public servants having confirmed that the reward was a solicitation”, according to the committee report.

The committee noted that the reward was in contravention of the Constitution particularly Articles 98 and 99 as relied on by the beneficiaries, the National Honors and Awards Act, 2001, the Public Service Standing Orders and the URA Human Resource Manual.

Independent E&P companies, domiciled in Europe and America, have been through so much in the last three years that they are giving up the African play to the majors. BG has been wrapped up in the voluminous folds of Shell. Tullow has sold its prime position in East Africa to TOTAL. BP will operate what used to be Kosmos led acreages in Northwest Africa.

Cairn Energy is still the lead hunter in that corner of the continent. Africa’s first and second Floating LNGs will be operated by independents. But, in general, are Africa focused Western independents still the continent’s wildcatters? Are they still the markers to where the opportunities lie?

The 2017 edition of Independents’ Day, this magazine’s once-a -year review of activities of foreign independent companies operating in Africa, pays close attention to the results of these companies’ exploration ventures in little known basins on the continent, as well as details of plans for the near term.

The Gharb Centre exploration permit, covering an area of over 1362 km2, has been awarded to SDX for a period of eight years, with a firm commitment from SDX for the acquisition of 200km2 of 3D seismic, and two exploration wells within the first four-year period.

The Gharb Centre area comes with a considerable quantity of recently acquired 2D and 3D seismic which has established multiple target horizons throughout the Miocene-aged strata, similar to what the Company produces from in its surrounding licenses.

The activity at Gharb Centre complements the work programmes at both Sebou and Lalla Mimouna, where development and exploration wells are planned for H2 2017, as previously announced. Pre-drilling activity is now underway in both permits where the tendering process for drilling rigs and associated services has been initiated. SDX has also received partner approval for seven drilling locations in these permits and is targeting a late Q3 2017 start date for the program.

For the first time ever, undeveloped discoveries in Nigerian Agip operated acreages may be awarded as marginal fields.
Two accumulations operated by the company are likely to be part of about 40 fields expected to be on offer, when the Nigerian government launches the much awaited marginal fields bid round later in the year.

Sources in Nigerian Agip, the Nigerian subsidiary of the Italian giant ENI, confirm that preliminary data from two of the company’s operated undeveloped discoveries are in the “bid basket” of the Department of Petroleum Resources, the agency responsible for conducting the bid round.

Agip has been unable to “participate” in marginal field awards since the exercise formally began in 2002 because, of all the majors, it has the least prospective acreages in Nigeria, especially Onshore, where the bulk of undeveloped discoveries referred to as marginal fields are located.

Only three of the five oil majors operating in Nigeria contributed fields in their acreages to the basket, during the in the landmark 2002/2003 marginal field bid round.

ExxonMobil did not contribute any field in those awards but has, in the past 15 years since then, “given” up two marginal fields: Okwok and Ebok to the Nigerian government, in furtherance of the cause, which is to help boost indigenous capacity.
Outside the 2002/2003 awards, Shell has contributed two more marginal fields. Ubima and Otakikpo were awarded by the Nigerian state in 2012, outside the process of a bid round, a situation that was severely criticised.

A small, non-producing E&P independent, is attempting a David on the French major

TOTAL’s announcement that it had entered into an agreement with the Senegalese government, on the Rufisque Offshore Profond (ROP) block, was countered by African Petroleum, less than 24 hours after the major’s claim on the block.

The Australia listed minnow said it had a subsisting agreement on ROP with the Senegalese government; the same authority that TOTAL claims it had a deal with. “Under the terms of the ROP PSC, the block remains active unless and until a termination procedure is enacted by the Republic of Senegal”, AP wrote in a statement. “To date, the Republic of Senegal has not validly enacted such termination procedure, and accordingly the Company reserves its rights under the ROP PSC”.

TOTAL had announced, on May 2, 2017, that under its agreement with the Republic of Senegal, it “will be the operator of the 10,357 square kilometer block with a 90% interest alongside Société Nationale des Pétroles du Sénégal (Petrosen), holding the remaining 10%.”

The Senegalese government had not offered a rejoinder to AP as of the time of this writing. TOTAL takes the Senegalese acquisition seriously; the agreements were signed by Patrick Pouyanné, TOTAL’s Chief Executive Officer and the Senegalese President Macky Sall . Both men were present at the Press Conference announcing the agreements, which also had Prime Minister Mahammed Boun Abdallah Dionne.”We have signed two new agreements to explore, look for oil and gas in offshore Senegal,” said Pouyanné.

TOTAL actually made some commitment at the conference. Mr. Pouyanné said the company intended to inject $ 100Million, although he did not give a time frame for the investment. Senegal has been at the centre of the recent rush for the Northwest African margin.

African Petroleum may have lost the asset for apparently sitting on it for so long without activity. It has been the 90% holder of ROP for over six years. The best that it has done was to purchase 1,800 sq km of three dimensional seismic data from Petrosen, which it was reprocessing. AP apparently hoped that, with a slew of discoveries in the neighbourhood, a well heeled E&P operator would come along and farm into the asset. Instead, the government chose to award it to one of Europe’s largest oil companies.

Two of the four companies that won the three acreages awarded at the close of Uganda’s 2015/2016 licencing round have discontinued with the process.

Waltersmith Petroman Oil Limited, awarded the 425 km2 Turaco Block in Ntoroko District, has opted out because of what it calls “unfavourable terms”.

Niger Delta Petroleum Resources(NDPR), which was paired with Oranto Petroleum International on the 410 km2 Ngassa block in Hoima district, said from the onset that it did not want to do get into the block unless it was granted operatorship. The company hasn’t had a conversation with any Ugandan official in the last four months.

South Sudan’s Ministry of Petroleum says it welcomes the interest of investors for direct negotiations on oil and gas in blocks B1 and B2. The announcement comes after negotiations broke down with the French oil and gas company Total E & P due to irreconcilable differences.

Officials of the Ministry of Petroleum met with representatives of the French major TOTAL in Kampala, Uganda between April 10 and 21, 2017. Also involved in the negotiations to develop an exploration and production sharing agreement (EPSA) for the blocks (B1 & B2) were UK independent Tullow Oil Private Limited Company and the Kuwait Foreign Petroleum Exploration Company (KUFPEC). The negotiations reached an impasse over the proposed exploration period and cost recovery limit.

“Following lengthy discussions with representatives of the company Total we have decided it is in the best interest of South Sudan to open opportunities to other potential investors,” said Ezekiel Lol Gatkuoth, Minister of Petroleum of South Sudan. “We had hoped for a favorable outcome but we believe these large and highly prospective blocks need a fast and ambitious development program to achieve their full potential. B1 and B2 are now open for direct negotiation.”

Blocks B1 and B2 were once part of the 120,000 square kilometer area known as Block B, which was divided into three licenses in 2012. The area is highly rich in hydrocarbon deposits but has experienced very little exploration. In March 2017, Pan African independent Oranto Petroleum Limited signed an exploration and production sharing agreement (EPSA) with the Government of South Sudan for Block B3. The area covers 25,150 square kilometers and has estimated reserves in place of more than 3 billion barrels.

“The resource base in these blocks are enormous and we need committed operators who are ready to invest and work with our government to comply with the laws of our country,” said the Minister. “South Sudan is creating an enabling environment for companies to operate. We want companies to invest, explore, produce and we are ready to offer incentives to investors.”
The Government of South Sudan has adopted a very pro-business stance with the expectation that aggressive investments in the petroleum sector will stimulate the economy. In 2017, the Ministry of Petroleum announced it was planning to double its total oil production by next year. South Sudan currently produces 130,000 barrels per day but can produce as much as 500,000 barrels per day.

The Ministry of Petroleum invites companies to negotiate directly on Blocks B1 and B2. Government officials will be present at the Africa Oil & Power conference in Cape Town onJune 5, 2017 to advance discussions with interested parties.

Minister of State prefers to kick start the process at the OTC in May 2017Nath Ojugbajue, in Abuja

The Nigerian Government is unlikely to have a full auction of all open exploration blocks in 2017, if the Petroleum Industry Bill (PIB) legislations are not passed before the end of the year, but the Minister of state for Petroleum thinks he can at least go ahead with a bid round for marginal fields.
“He is eager to get a bid round done this year”, sources at the Ministry of Petroleum (MoP) affirm, “but the one without any inhibition is the marginal field round”.

Africa’s leading hydrocarbon producer has snagged more assets in a prolific part of the continent’s deepwater.
Italian explorer ENI has been awarded 90% interest in two new exploration blocks, in the Ivorien part of the Tano basin, which has proven commercial in nearby Ghana.

With this March 2017 acquisition of Cote d’Ivoire’s CI-101 and CI-205, covering an area of approximately 2,850km², ENI is following up on its acquisition, in 2016, of the Cape Three Point Block 4, in the same Tano Basin, in neighbouring Ghana.
ENI’s interest in Cote d’Ivoire’s segment of the Tano basin suggests that the company is evaluating the entire Basin, which straddles the two countries.

Ghana and Cote D’Ivoire have dragged themselves to court over oil production in this basin, with Cote d’Ivoire arguing that it is entitled to some of the oil being produced in Ghana’s TEN cluster of fields (operated by Tullow).

Whereas ENI’s Cape Three Point Block 4 is an exploratory tract, the company is developing another block in Ghana. The Sankofa-Gye-Nyamme project in the Offshore Cape Three Points (OCTP) is expected to come on stream by the third quarter of 2017, delivering, at peak, 45,000BOPD of oil and 180MMscf/d of gas.

ENI will operate the two newly awarded blocks in Cote d’Ivoire, with remaining 10% stake owned by Petroci, the state-hydrocarbon company.